Gains and Trade Hillbilly cousins Jethro Bodine and Elly May Clampett are sent o
ID: 1225753 • Letter: G
Question
Gains and Trade
Hillbilly cousins Jethro Bodine and Elly May Clampett are sent out by Granny Moses to fetch possums and musturd greens for the daily vittles. Table 1 gives the number of possums hunted per hour or the number baskets of musturd greens gathered per hour by Cousin Jethro and Cousin Elly May, respectively. For example, an hour worth of chores by Jethro always yields either five possums or three baskets of musturd greens. Show all work!
Table 1
a. Does Elly May have an absolute advantage in any good?
b. What is the relative opportunity cost for Jethro of hunting down an additional possum?
c. What is the relative opportunity cost for Elly May of hunting down an additional possum?
d. Does Jethro have a comparative advantage in either chore? Demonstrate why or why not.
e. Does Elly May have a comparate advantage in either chore? Demonstrate why or why not.
Possum Musturd green Jethro 5 3 Elly May 4 2Explanation / Answer
a. No
b. Opportunity cost for Jethro of hunting down an additional possum = 3 / 5 = 0.6 Musturd green.
c. Opportunity cost for Elly May of hunting down an additional possum = 2 / 4 = 0.5 Musturd green.
d. Opportunity cost for Jethro of gathering an additional Musturd green = 5 / 3 = 1.67 possum
Opportunity cost for Elly May of gathering an additional Musturd green = 4 / 2 = 2 possum.
Therefore, Jethro have a comparative advantage in gaathering Musturd green, because the Opportunity cost for Jethro of gathering an additional Musturd green is less (i.e. 1.67 possum) than Elly May (i.e. 2 possum)
e. Elly May have a comparate advantage in hunting down possum, because Opportunity cost for Elly May of hunting possum is less (i.e. 0.5) than Jethro (i.e. 0.6).
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